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The Horse Ride Club has a capacity to stable 50 horses. The fee for stabling a horse is RM100 per month. Maintenance, depreciation, and other fixed operating expenses total RM1200 per month. Variable operating costs per horse are RM12 per month for hay and bedding and RM8 per month for grain.
Problem i. Calculate the operating break-even point (in horses stabled).
Problem ii. Compute the monthly operating profit if an average of 40 horses are stabled.
Problem iii. If a company sells 20,000 units at RM20 each, has fixed costs of RM50,000 and a variable cost of RM10 per unit, what is their degree of operating leverage (DOL)?
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